SYDNEY, AUSTRALIA: Lion Selection Group has agreed to acquire 14.0M PhosCo shares from the manager. This increases Lion’s PhosCo holding from 14.8% to 19.9%.
Through this transaction, Lion Selection Group will increase its exposure to PhosCo, which in Lion’s view has a deep value creation proposition around its Tunisian rock phosphate assets, as the company derisks the Chaketma Phosphate project and looks to acquire an exploration permit over the Sekarna Phosphate project.
The pricing of the shares agreed between Lion Selection Group and the manager acknowledges Lion’s underlying value at 64.7c (the Net Tangible Asset backing at 2December) and PhosCo’s recent share price at 13c.
Consequently, Lion will (subject to shareholder approval) issue shares at a 35% premium to Lion’s recent share price and acquire PhosCo shares at the market price.
The transaction increases alignment between Lion Selection Group and the Manager by providing additional incentive to the Manager.
The Manager’s shareholding in PhosCo has arisen through participation in PhosCo fundraisings to support the company through difficult times, in addition to PhosCo directors’ fees paid to the Manager by way of PhosCo shares in order to conserve cash.
Lion remains focussed on prioritising investment in Australia and on the precious metals, base metals and battery materials commodities. While Lion’s follow-on investment in PhosCo falls outside of these focus areas, Lion has been an investor in PhosCo since 2010, with the modest investment premised on achieving an influential level in a company that Lion knows well in a commodity with favourable fundamentals.
PhosCo’s outlook is exciting with project assessments advancing with the possibility of defining a worldclass scale rock phosphate project. PhosCo has outlined a work program that can achieve further project assessment and potentially create significant value with relatively low capital deployment.
PhosCo is capitalised at $36M, Lion’s resultant PhosCo shareholding will account for $7.1M / 4.7cps / 7.4% of Lion’s NTA. While this makes PhosCo one of Lion’s more significant holdings, Lion’s remaining portfolio is largely cash $35.3M and holdings that are expected to convert to cash $46.0M during early 2023.
PhosCo Ltd (ASX:PHO) is an ASX-listed company focussed on the development of a potential large-scale, world-class mining operation around its Chaketma Phosphate Project in Tunisia.
